Coronavirus outbreak: Burberry warns epidemic hitting demand
More than a third of the UK firm's stores in China are shut, while travel restrictions are expected to squeeze tourist spending.
Friday 7 February 2020 12:26, UK
British luxury brand Burberry has warned the coronavirus outbreak is hitting sales in both mainland China and Hong Kong.
The upmarket fashion label said 24 of its 64 stores in China were closed as a result of the deadly infection, and there had been a significant fall in the number of shoppers visiting its remaining outlets, which were operating on reduced opening hours.
The firm also pointed out that while spending by Chinese visitors to Europe and other tourist destinations had so far have been less affected, given the widening travel restrictions, it expected this "to worsen over the coming weeks".
Burberry chief executive Marco Gobbetti said: "The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand.
"While we cannot currently predict how long this situation will last, we remain confident in our strategy.
"In the meantime, we are taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees.
"We are extremely grateful for the incredible effort of our teams and our immediate thoughts are with the people directly impacted by this global health emergency."
So far the epidemic has claimed 636 lives in mainland China, while the number of cases has hit 31,161.
The country has sealed off cities, cancelled flights and closed factories to try to contain the virus.
Burberry, famed for its trench coats and trademark check scarves, had already been suffering from the widespread protests which have rocked Hong Kong over the last seven months, although mainland demand had been taking up some of the slack before the epidemic struck.
The company said: "We are taking mitigating actions but the benefit in the current year will be limited given the proximity to our March year end.
"We also intend to continue our key growth initiatives in preparation for a recovery in luxury demand."
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Meanwhile, a number of Chinese manufacturers including the electronics giant Foxconn, which makes the Apple iPhone, have revamped their production lines to make masks and medical clothing in a bid to meet shortages, as the deadly infection spreads.
The firm, which is China's single biggest employer, said it has begun trial production of surgical masks at its plant in Shenzhen, and expects to produce two million masks daily by the end of the month.
The carmaker SAIC-GM-Wuling Automobile Co Ltd has also announced it will set up 14 production lines with the goal of making 1.7 million masks a day, while the clothing manufacturer Hongdou Group Co Ltd has also refitted a factory to make disposable medical suits.